By Rob Nikolewski
The San Diego Union-Tribune
WWR Article Summary (tl;dr) Tesloop bills itself as the future of mass transit, like an airline or train system but in a smaller and more customer-friendly scale, serving routes up to 250 miles, which corresponds to the range a Tesla can predictably go on a full charge.
The San Diego Union-Tribune
Let’s say you want to go to Paris on vacation and you find a really inexpensive airfare online.
But the flight leaves out of LAX, not Lindbergh Field in San Diego.
Given the notorious traffic conditions on I-5 — not to mention the hassle and high price of parking your car during your trip at the airport parking lot — chances are, you would quickly toss that idea out the window.
But let’s say a ridesharing service could pick you up from your neighborhood Starbucks and drop you off at or near LAX for about $50, maybe less. And you would make the trip while riding in a Tesla.
Then you might just say, “Bienvenue … Paris.”
An example like that fits precisely into the business strategy of Tesloop, a 2-year-old startup based in Culver City, that ferries passengers to and from locations in greater Los Angeles, Orange County and Palm Springs. Last month, the company added San Diego to its SoCal loop.
“San Diego is a huge market for people traveling between L.A. and San Diego,” said Rahul Sonnad, Tesloop’s CEO and one of its co-founders. “We think it’s about 48,000 people each day, each direction.
“When you look at the current transportation options, driving yourself is a challenge. It’s stop and go, it takes a long time, it’s tiring … so we think San Diego is really a great market — the right distance where you can more effectively travel by electric car.”
All the cars in the company’s fleet are all-electric Teslas — hence the name Tesloop — but Elon Musk’s signature brand has no connection to the startup.
Sonnad said the people running Tesla have never complained about the similarities in companies’ names.
“I would guess they had some discussions but they decided it wasn’t infringement,” Sonnad said. “We’re actually in a different category of business than them. We’re in transportation; they’re in car-making … Early on we told them if they had a problem we would change our name and they didn’t request we do so.”
Tesloop bills itself as the future of mass transit, like an airline or train system but in a smaller and more customer-friendly scale, serving routes up to 250 miles, which corresponds to the range a Tesla can predictably go on a full charge.
The company also emphasizes its green credentials, pointing out traveling in all-electric vehicles does not emit greenhouse gases into the atmosphere.
So how does Tesloop work?
Riders go to the company’s website and, just like booking a flight, browse Tesloop’s departure times and estimated arrival times for the routes it serves.
Tesloop shuttles between locations in greater Los Angeles and San Diego areas four to six times a day and between Los Angeles and Palm Springs six times a day.
Tesloop’s fleet is made up of one Tesla Model S that seats up to three passengers (not counting the driver, which the company calls a “pilot”) and seven of Tesla’s Model X series vehicles that seat up to four riders.
Just as one would be assigned a specific seat on a plane, customers book a reserved seat.
Prices generally run between $39 to $79 per leg. The price can go as low as $29, with the passenger riding in the third row of the Model X. In order to avoid empty seats, the $29 fare is available the day before or the day of a trip.
If you prefer to travel in private, an entire car can be booked for as little as $116.
“It’s like a business-class experience,” Sonnad said. “You don’t touch shoulders (with other riders). It’s very relaxing.”
Customers have access to free Wi-Fi modems, USB ports for electronic devices, smart-phone charging cables, headphones and neck pillows. Complimentary beverages, such as coconut water, and healthy snacks are also provided.
Pickup and drop-off locations are concentrated at hotels and Starbucks outlets.
“Our goal is to have you wait no longer than five minutes but there’s this thing in Southern California called traffic that sometimes gets in the way,” Sonnad said, “We don’t want anyone to wait more than 20 minutes and if you’re waiting 20 minutes at a Starbucks or at nice hotel lobby, that’s not so bad … We try to make all of our pickup places pleasant.”
Tesloop does not offer door-to-door pickups and says its drivers will wait no longer than 10 minutes for passengers who are running late.
A ride from one of Tesloop’s pickup spots in downtown San Diego to downtown Los Angeles takes about two and a half hours. You can also go between greater San Diego and destinations in Orange County but not from San Diego directly to Palm Springs.
Tesloop is working to get the necessary permits to pick up and drop off customers at every airport in its service area. Some of its cars have access into LAX and Sonnad expects that within the next month every Tesloop car will have the OK.
Once a trip is booked, riders receive multiple messages by text or cellphone from a “concierge,” updating them on pickup times and alerting them of the estimated time of arrival.
Via a smartphone in the vehicle, the concierge speaks to riders from Tesloop headquarters and is ready to address any needs of riders during the trip. Passengers can request a bathroom break at any time.
Tesloop’s “ground control” monitors the car’s every move, continuously noting its speed and location.
Sonnad said Tesloop has about 60 people on staff, including 40 drivers and 10 people working shifts at company headquarters.
So if the fares are pretty cheap, how does Tesloop make money?
A big chunk of the company’s business model is based not only using their vehicles efficiently but frequently.
Tesla guarantees its cars with an eight-year unlimited mile warranty on the motor and Tesloop seeks to maximize the use of each of its vehicles.
The oldest car in the Tesloop fleet has racked up 300,000 miles without any significant maintenance costs. “We had to buy a battery and get an alignment and that was it, other than tires,” Sonnad said.
The company’s cars on the L.A.-Palm Springs route rack up 17,000 miles a month.
Plus, since the cars are electric, Tesloop doesn’t pay for gasoline. And since Tesla offers customers free unlimited supercharging, Tesloop’s fees for charging its fleet is essentially nil.
Sonnad said it takes as few as two paying passengers to make a single trip profitable.
“Let’s say you (book) three seats at $50,” Sonnad said. “That’s $150 each trip. That’s $600 a day. That’s $17,000 a month. That’s more than anybody in the world makes with cars today. And the car costs $3,000 a month to lease. So you’re (taking in) $17,000 a month and you’re getting free fuel.”
Working on the expectation that autonomous — essentially, driver-less — vehicles will hit the roads and highways in the coming years, Tesloop officials anticipate selling the driver’s seat to a prospective passenger as well, which would further boost revenue.
“The cost basis for these cars is unprecedented,” Sonnad said earlier this week, while on a brief stop at Mission Bay. He pointed to a car parked nearby. “It is cheaper to drive this car than that Toyota Corolla, per mile.”
What if just one person is booked? Sonnad said Tesloop will not cancel a trip once someone has confirmed a seat. “We absorb the risk of low bookings,” Sonnad said.
Tesloop officials say the company has not turned a profit yet but projects to in about a year.
While Tesloop describes itself as a ride-sharing company, Sonnad does not consider outfits like Uber and Lyft as direct competitors because those companies focus on shorter trips.
“Under 50 miles, we don’t think we have any major benefits,” Sonnad said. But going longer distances fits the Tesloop model. “We’re competing with the train and the plane and the bus and long hauls.”
The concept for Tesloop did not come from Sonnad but from his son, Haydn. After receiving his driver’s license, the then 16-year-old wanted to lease a Tesla and thought a good way to pay the monthly bill would be by shuttling people from the Los Angeles area to Las Vegas.
He turned out to be too young to qualify for the insurance required for livery service but his father, a tech entrepreneur, thought the idea was a good one and organized a startup team that launched the company in 2015.
Tesloop has discontinued its LA-Las Vegas route, finding it less than cost-effective since there are inexpensive flights between the two cities and the 270-mile distance required a stop to charge the car.
Sonnad said the company expects to expand service to Santa Barbara and, looking long-term, is considering taking Tesloop to South Florida and Texas.
Clearly, Tesloop’s future in many ways is tied to the fortunes of Tesla Motors.
Even though Tesla’s NASDAQ valuation has soared above $380 a share, the company has its share of doubters.
Pointing out that Tesla vehicles make up a tiny percentage of the overall auto market, former GM vice chairman Bob Lutz last year said, “Tesla supporters are like members of a religious cult.”
Earlier this month, the chief executive of the Russian oil giant Rosneft called manufacturers such as Tesla overvalued and “overestimtated.”
But Sonnad is undeterred, convinced the entire transportation sector will be upended in just a few short years.
“Everything around here over the next 10 years is going to change,” Sonnad said. “Every car, every road, every gas station, every energy power center.”
One of the trips offered on the Tesloop website between San Diego and downtown Los Angeles
Date: Friday, June 23
From: Hillcrest Starbucks, 1240 University Ave.
To: JW Marriott, downtown LA, 900 W. Olympic Blvd.
Leave: 8:42 p.m.
Arrive: 10:51 p.m.
Source: Tesloop website